LVMH Says It Will Countersue Tiffany In Takeover Gone Sour

Topline

Luxury goods purveyor LVMH said Thursday it will countersue fine jewelry maker Tiffany for mismanagement and violating the terms of their deal to take it over, according to a statement, coming just a day after LVMH said it was pulling out of the deal and Tiffany filed a suit to force the deal through.

Tiffany, the storied American jeweler, locked horns this week with luxury purveyor LVMH as their … [+] takeover deal has taken a turn for the worse.

Photo by FABRICE COFFRINI/AFP via Getty Images

Key Facts

LVMH’s countersuit is expected within days, according to the New York Times.

In a Thursday statement, LVMH said it was “surprised by the lawsuit filed by Tiffany” that was “clearly” prepared “a long time ago” and “communicated in a misleading way to shareholders and is defamatory.”

The Louis Vuitton owner said it will file its suit in Delaware—where Tiffany, an American company, sued LVMH on Wednesday—over the jeweler’s alleged mismanagement of its business this year, including paying out dividends when it was posting losses.

LVMH maintains it cannot complete the takeover because of orders from the French government, which wanted the company to wait until January to make the deal final, instead of the original November deadline.

The French government is worried about the threat of possible U.S. tariffs on French luxury goods, according to the Times.

Tiffany has not responded to LVMH’s planned countersuit as of Thursday morning.

Crucial Quote

“LVMH will defend itself vigorously,” the company said in its statement. “The long preparation of [Tiffany’s lawsuit] demonstrates the dishonesty of Tiffany in its relations with LVMH. This action is essentially based on the accusation by Tiffany that LVMH failed to take the reasonably necessary steps to obtain the various regulatory authorities’ approvals in a timely way. This accusation has no substance and LVMH will demonstrate this to the Delaware Court.”

Big Number

0.68%. Shares of both LVMH and Tiffany were slightly up at the opening bell despite the news of the countersuit.

Key Background

LVMH said in November 2019 that it would buy the storied Tiffany & Co. for a record-shattering $16.2 billion. Since then, the deal has been plagued with LVMH’s doubts that it was paying too much for the heritage brand, and billionaire owner Bernaud Arnault was negotiating with Tiffany to lower its agreed-upon $135 per share. That attempt was dropped, but LVMH continued to look for other ways to renegotiate the deal amid the coronavirus pandemic. In its Wednesday lawsuit, Tiffany argues that LVMH hasn’t met its obligations in seeking antitrust clearance, and therefore cannot claim Tiffany has breached the merger agreement. Tiffany also lobbed another accusation at LVMH in a Wednesday statement: “This latest development represents nothing more than LVMH’s most recent effort to avoid its obligation to complete the transaction on the agreed terms, not dissimilar from LVMH’s baseless, opportunistic attempts to use the U.S. social justice protests and the COVID-19 pandemic to avoid paying the agreed price for Tiffany shares.”